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ELLIOTT WAVE ANALYSIS - Latest Market Commentary

Stock Indices

Last Friday’s announcement from the European Central Bank confirming its intention to begin further stimulus measures for the Eurozone economy through purchasing of ABS instruments helped European and U.S. indices extend weekly gains into the closing session. The Eurostoxx 50 and Xetra Dax began unfolding higher from the mid-October lows into overlapping sequences that characterises counter-trend patterns – these are now trading into maximum upside targets but only towards last Friday’s close, and it will take Monday’s action to determine if price### rejection occurs to confirm the completion. Should these resistance levels fail to respond with additional gains pulling levels higher, then a break above the June/July highs will suddenly become possible. Meanwhile, the S&P 500 has clocked another record high and it will be next week’s European stock index performance that offers guidance as to whether the mid-October upswing has already ended or alternatively, continuing higher to our next upside targets towards 2128.25+/-. It remains a delicate balance between these two short-term scenarios – a more immediate topping formation is justified when looking at the top-heavy Nikkei and the positively correlated US$/Yen. In the background, the Aussie$/Yen currency cross depicts the completion of a counter-trend zig zag upswing from the August ’13 low implying Yen strength is about to begin. Also, the MSCI Emerging Market index has trended lower since forming a high last September and we expect a -24% decline during the next several months. For the moment though, we cannot exclude the short-term trends continuing higher whilst central banks are prepared to continue monetary stimulation. 24th November 2014

Financial Updates Currencies

Currencies (FX)

The US$ continued higher on Friday which suggests it might already be engaged in the upswing to ultimate upside targets that vary between min. 8879 and max. 8956. There is one caveat however concerning the short-term picture: failure to break above resistance at 8857+/- would indicate another pullback to downside support at 8686 that was mentioned in previous updates. In this case, the counter-trend correction from the early November high of 8819 would be still in progress, unfolding into a more complex expanding flat pattern. A swift advance higher would otherwise highlight the 8879-8956 target range and, more importantly, emphasise the subsequent ###downside risk. Remember that the US$ is not only on its way to finalise the multi-month upswing from the May ’14 low of 7890 but also the multi-year advance from the May ’11 low of 7269. Thus, once a reversal signature has occurred, it will signal the onset of a protracted and severe decline during the next several months. The mirror image for the Euro/US$ is similarly weighted: a short-term decline into original downside objectives towards 1.2183+/- should be followed by a reversal signature and the beginning of a sustained upswing in the months ahead. Unlike the US$, however, the pattern structure of the Euro/US$ depicts the completion of a counter-trend expanding flat correction that dates back to the Feb.’13 high of 1.3711. The larger pattern that began from the July ’12 low of 1.2042 is still in progress and expected to continue higher in the following months – ultimate objectives are retained towards the 1.4408+/- area. Meanwhile, Sterling is edging lower in an almost step-like motion. Two additional lower lows are expected to finalise the ongoing double zig zag sequence that is unfolding as a larger 2nd wave from the July ’14 high of 1.7192. Original targets measure to 1.5386 basis a fib. 61.8% extension of the first zig zag – await a reversal signature from there to validate 3rd wave advances that will propel Sterling into higher highs during the following months. After a brief spike to 11898, slightly above original upside targets at 11800+/-, the US$/Yen is now poised for a reversal signature. This would confirm the conclusion of several degrees of trend and thus initiate a sustained decline in the months ahead – interim support measures to 10689, ultimate objectives to 10003. 24th November 2014

Financial Updates Bonds

Bonds (Interest Rates)

In order to stimulate the Eurozone economy, the European Central Bank continues its mandate to expand its balance sheet to early 2012 levels of one trillion Euros. So far, this began with the purchase of covered bonds but last week’s statement from Mario Draghi has confirmed its intention to put asset-backed securities at the centre of these plans because this asset class allows### banks to transfer risks to investors that in turn would translate into offering more credit to companies. Germany’s benchmark DE10yr yield drifted lower after the announcement retesting last week’s lows of 0.720 but holding above the mid-October low of 0.666. Last month’s initial upswing from this low began a zig zag corrective rally that remains incomplete with a final upswing forecast towards 0.908 or 0.957 for completion prior to staging a reversal decline that continues the larger downtrend. The US10yr yield has recovered well since forming its mid-October low at 1.912 but lacks any ‘price-expansion’ that would confirm an uptrend in progress. Instead, this advance to recent levels of 2.400 are more characteristic of a counter-trend double zig zag pattern – upside targets remain towards 2.481. How the US10yr yield responds will determine the next major trends into 2015. 24th November 2014

Commodities

Gold’s upswing from the early November low of 1131.85 began a counter-trend 4th wave rally within the declining five wave pattern that began last March from 1392.30. This rally has so far unfolded into a three wave zig zag to 1205.01 but a slight nudge above this level last week suggests this recovery will extend into a double zig zag pattern before it has completed. The next upside target is towards the fib. 50% level at 1233.99 but in all probability, a secondary zig zag will trade higher to ###the fib. 61.8% resistance at 1259.38. This would be adequate to balance the oversold condition that occurred into last month’s low prior to a 5th wave decline with ultimate downside targets towards our medium-term downside target of 1096.00+/-. Silver is mostly trading in tandem with gold and this means its recovery upswing from this month’s low of 15.07 would extend towards 17.39-43 before staging one additional decline towards 14.20+/-. Overall, the medium-term outlook identifies precious metals entering the final stage of their entire counter-trend declines that began from the 2011 highs with a new bull market expected to begin next year. Crude Oil has begun a modest recovery having completed a 3rd wave decline last week at 73.25. A 4th wave corrective upswing is expected to take hold as we enter the new week with min. upside targets towards 82.20+/- prior to finalising the 5th wave decline that projects a low into early 2015 towards 67.77+/-. 24th November 2014

LATEST ARTICLES

THE ‘INFLATION-POP’ - PRECIOUS METALS SET TO SURGE INTO RECORD HIGHS

Bloomberg hosted a Precious Metals Forum on 23rd May and WaveTrack International was invited to present our latest Elliott Wave price-forecasts. The event was sponsored by the CME Group and Johnson Matthey.

OUTLOOK & FORECASTS FOR 2013

Highlights:

  • The 2013 outlook for global stock indices and commodities remains very bullish and is entering the last stage of the ‘inflation-pop’ phase that originally began from the post-financial crisis lows of 2008/09
  • This is expected to ignite another period of asset buying that increases risk-on multiples by a minimum 45% per cent and in some cases as much as +300% per cent, sending some global stock indices and commodities into record highs
  • Shorter-term, there is a danger of a downward adjustment of -5-8% per cent, but then sharp price advances to resume
  • Commodity related stock indices and equities are expected to outperform as a sector during the next 12-16 months
  • Banking stocks to participate, but most will not exceed their pre-financial crisis highs

As always, this year’s Outlook & Forecasts for the next twelve months are created applying the Elliott Wave Principle for the assessment of pattern and price amplitude, also Cycle Analysis for the timing of the larger trend reversals. Not always do they jive, but they seldom contradict and more often, provide valuable insights into one or two variations of a similar theme within a seemingly unlimited amount of possibilities.

Even though this report outlines the price expectancy of all asset classes for 2012 it will also illustrate how this coming year fits together into the larger picture. The reasoning behind this is to move away from the 'black-box' stereotype and show you why the results relate to their specific outcome. Overall, this report deals with two different time-periods – long-term and inter-mediate term. Long-term refers to the uptrends from the Great Depression of 1932 onwards and inter-mediate term for the coming year and into 2013.

HOW TO INTERPRET EACH ELLIOTT WAVE CHART

What do you see when looking at an Elliott Wave chart? Just lots of numbers & letters overlaying the price data? – or do you see definable patterns that are immediately familiar? And how do you interpret the results of the analysis and put it into an effective trading plan? Read on and test your own knowledge of these subjects and much more...

A COMMODITY SUPER-CYCLE?

Recent reports of a Commodity Super-Cycle grabbed my attention for two reasons – first, this is diametrically different to the outlook I foresee developing during the next decade, and second, this terminology has surfaced at a time when various commodities have already undergone large percentage gains measured from the Feb.'09 lows

THE 'DEFLATIONARY SCENARIO'

The primary theme of this presentation focuses on a 'Deflationary' outlook, forecast as the dominant aspect continuing during the next decade. This is derived from analysing the Elliott Wave pattern structure of the CRB (Cash) Index during its expansionary period of the last 76 years.

THE 'FLASH CRASH'

The Update Alert! messaging service of EW-Forecast Plus responded to the sharp collapse and the following recovery of US stock indices during the volatile trading session on the 6th May.

OUTLOOK FORECASTS FOR 2011

This analysis centres around the S&P 500 that is used as a proxy for other global indices. The great bull market beginning from the 1932 low ends 68 years later in 2000 - other global indices peaked later in 2007 (75yrs) – some still continuing to progress.

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"I just wanted to congratulate you on the EW-Compass reports launch. I'd say all the work you've all put into this project is well worth it… never cease to be amazed by the harmony that you find between the fib relations you highlight and the Elliott count you propose. You are a true descendant of RNE, and I'm quite sure he'd have really loved to see your work… Another aspect that sets you apart is your deep knowledge of the how and why of pattern relationships between higher & lower degrees of the same price action. So much to learn there". - T.S.

ELLIOTT WAVE PATTERN

INTRODUCTION TO THE WAVE PRINCIPLE

The Wave Principle, often referred to as Elliott Wave is a unique methodology that applies Natures Laws, those encompassing the Natural Sciences and Universal Geometric Philosophies to the financial markets. It allows us to view price fluctuations as an organised process that can be non-linearly extrapolated to gain a glimpse into the future direction of trends, counter-trends and amplitudes on any market or contract traded around the world.

Expanding Diagonal Patterns - Do they actually exist? - Elliott's inclusion of the Contracting Diagonal

In R.N.Elliott's original treatise of "The Wave Principle (1938)", he introduces us to diagonal patterns for the first time on page 21. Under the heading, Triangles, Elliott describes the difference between horizontal triangles that represent hesitation within an ongoing, progressive trend and diagonal triangles that form the concluding 5th wave of a larger five wave sequence.

NEWS & EVENTS

Tradersworld Online Expo #12 – Starts 12th November 2012

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 12th Trader Expo held online for 7 weeks starting on 12th November 2012 and ending in the new year on 6th January 2013. Peter’s presentation is entitled “Elliott Wave Price Forecasts & Cycle Projections – Three Phases of the 18 Year Bear Market ~ ‘Shock–Pop–Drop’” for more information visit http://tradersworldonlineexpo.com/

Announcement: 123rd Battery Council & Trade Fair Convention in Miami, 1-4 May 2011

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 123rd Trade Fair Convention of the Battery Council in Miami, 1-4 May 2011. Peter’s presentation is entitled "The Historical Price Trend of Lead and Applying the Elliott Wave Principle to plot its course into the Future".

ELLIOTT WAVE PRICE-FORECAST UPDATES